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News/Business. Ali Velshi. CNN anchors break down the financial news of the week. New.

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U.s. 23, Us 14, Washington 13, America 13, Ali 5, United States 3, Coca-cola 3, Kate 3, Ron Brownstein 2, Subaru 2, Dell 2, Geico 2, Blackberry 2, Fareed 2, India 2, Davos 2, China 2, Christine 2, Christine Romans 2, Denmark 2,
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  CNN    Your Money    News/Business. Ali Velshi. CNN anchors  
   break down the financial news of the week. New.  

    January 19, 2013
    10:00 - 11:00am PST  

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woman: we're helping joplin, missouri, come back from a devastating tornado. man: and now we're helping the east coast recover from hurricane sandy. we're a leading global insurance company, based right here in america. we've repaid every dollar america lent us. everything, plus a profit of more than $22 billion. for the american people. thank you, america. helping people recover and rebuild -- that's what we do. now let's bring on tomorrow. washington continues to toy with creating another economic crisis. what are the consequences? welcome. i'm ali velshi. the government has paid its bills on time for 237 years and
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now congress is threatening to blow it. earlier this week, the ratings agency fitch threatened to downgrade america's sovereign credit rating if washington failed to resolve the issue in a timely manner. s&p downgraded america's perfect credit rating back in august of 2011. fitch didn't do it at the time. but the last time we had one of these debt ceiling debacles that embarrassment was the first downgrade of u.s. credit in history. if congress doesn't act and we default for the first time ever, the consequences are likely to be severe for all of us. federal interest costs would likely rise, business and personal borrowing costs would probably follow. it would also make the struggle to manage our historic debt levels tougher. the worst thing that can happen if you're beck lg under debt, is for your interest rate to go up. it could mean higher taxes and more cults to programs and services from the government. any hope for a controlled fix to our debt problem would be compromised. failing to pay for what we've
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already spent would be hazardous to the fragile economic recovery now gaining steam. just this week we got a reading about construction of new homes. it jumped 12.1% in december compared to the month before. that's the highest in more than four years. first-time claims for unemployment benefits fell to a five-year low. and the stock market that you invested in your 401(k) and i.r.a. is hitting five year highs. things are okay. defaulting on our fiscal obligations would hit the economy harder than that cliff we narrowly avoided and will face again. a report put out by jpmorgan in 2011 exploited the myth going around a few missed payments would be no big deal. they said any delay by the treasury would have ripple effects similar to the aftermath of the lehman brother collapse. not sure that's true but it's serious. this is all caused by the dell ceiling. the u.s. is the only other country other than denmark that
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uses this tool. that's why ben bernanke has joined critics questioning why the u.s. needs a debt ceiling. >> i think it would be a good thing if we didn't have it. i don't think that's going to happen. i think it's going to be around. but i hope that congress will allow the government to pay its bills. >> ron brownstein is cnn senior political analyst and editorial director at the "national journal." good to see you. the public debt stands at more than $16 trillion. in and of itself it may not be as serious a problem as some make it out to be, especially when it costs the government about 1.8% a year to borrow money right now, lower than inflation. the problem which you often point out is it is likely to get much worse and that no one has a plan to change it. do republicans have a point when they say this is the only leverage they've got, the only chance they have to really assert a move toward deficit reduction? >> you know, in my mind they
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actually missed the best chance they had, which was the expiration of the bush tax cuts, which was really the best chance for both sides. if there was ever a point where a grand bargain was possible, it would have been i think the republicans accepting rolling back more of that tax cut than we did in return for acquiring democrats to deal with the very real long-term challenge of entitlements. we did not take advantage of that. we had a minimalist deal that confirms 82% of bush tax cuts, possibly the worst possible outcome and no spending cuts, probably the worst possible outcome in the long term from a deficit perspective. now i think the history is this is not a powerful mechanism. in the end it's a doomsday device you cannot use. you go back to the midninety with bill clinton and the republican congress, look at 2011. i think in the end they will decide they cannot use this measure and they seem to be heading that way this week in their house republican retreat. >> ian bremer is with us. he's the president of your asia
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group. business leaders around the world pay attention to you. i was intrigued to see you wrote the continuing role of u.s. stability tops your list of upside in your global economic outlook. u.s. stability you said, not instability. thought it was a typo. you've been lying under a rock for the last several weeks or i'd like to try a dose of whatever medication you're on. >> not as if i think washington is working well. the washington dysfunction was number four of the top risk we put out in 2013. the question is what's the impact on the united states as opposed to a china, russia, brazil. the u.s. is the world's largest economy, the u.s. dollar is a global reserve currency. housing continues to pick up, unemployment is going down, american corporations are the world's largest and they're sitting on lots of cash, which, you know, sort of quixotically
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it's precisely that strength that allows washington to continue to be so incredibly dysfunctional. yeah, i'm feeling pretty bad over whae's coming out of capitol hill in the next few months but it's not medication that leads me to believe america is stable. >> even washington may not be able to mess up what's going on. christine romans, we've been talking about the consequences of not having a budget, a serious plan to deal with debt and deficits. but a number of prominent democrats point out the debt problem isn't that much of a problem. money is basically free many america and republicans should stop obsessing about it. >> a new narrative and they're getting bolder with it. the debate is the way liberals and conservatives see the world. those on the left have no problem with the government taking a larger role in the economy. they believe spending and borrowing money is a good thing because it stimulates the economy. economists like paul krugman, liberals, they argue it's the
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money the government owes itself. the u.s. is borrowing from itself. as long as the tax base grows the treasury can keep that debt under control. robert reich, he says washington needs to stop obsessing over debt. he says the government should spend more, not less, if he want a stable recovery. and conservatives by contrast, they believe in a smaller government. they think the government has little or no role or a limited role in the economy. so naturally they see any spending beyond what the government takes in as a drag on growth and efficiency in the free market. so interesting because it's narrative that debt's not a problem against this other nary they've debt is the only problem. they're both wrong and neither figures out how to fix it. >> ron brownstein, your narrative is one of the clearest. it's not that debt's not a problem. it's these cuts to entitlements and spending is is not what the
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issue is. the issue is entitlements are going to grow to fast we'll have a government that doesn't do anything in the way of investment and infrastructure and only gives people money for purposes of consumption. >> right. you have a short-term issue and a long-term issue. the short-term debate is whether you need in effect more stimulus to try to get the economy moving faster by taking on more debt many the near term. but there's a very different question about the long term. the number of seniors in the u.s. is projected to roughly double over the next 30 years. that creates enormous financial pressure on medicare, medicaid, and social security. we've already seen over the last jep ration a tremendous shift of resources from the future to the past, from younger generations and investment to entitlements and kind of sustaining older generations. in 1969, one-third of the federal budget was characterized as payment to individuals and one-third characterized as public investment. today only one-sixth is characterized as public investment and over 60% is
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characterized -- one the doubled, one is cut in half. in the long run that's no way to run a country. i think what democrats will have to acknowledge is if you allow entitlements to grow in the trajectory they're on, as you say, very little money to do anything else. for republicans, their real fight is not around ideology but demography. in a country where the number of seniors is is doubling over the next 30 years it's not plausible the share of consumer gdp is not going to increase somewhat even if we make necessary refrenchments in the entitlement stage. >> ian? >> keep in mind congress's approval rate rgs 14% and only going down. those individual congressmen, when you talk to their constituents, are liked quite a bit. they're in jergerrymandered districts, they're very homogeneous, and they're bring back the bacon for folks that aren't prepared to pay right now. you don't have an american association for young people, aayp, saying how dare you
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mortgage my future. you have the aarp for people who vote and have a lot of money. as long as there's relative comfort in the short term and international folks are willing to continue to invest and keep our interest rates low by buying treasurie treasuries, don't want to go to europe or japan, we'll keep these policies. the next year it will be a lot of congressional dysfunction. usually the first year of the second term is when you get all the legislation through. won't see it in 2013. >> christine? >> no association for young people but you have this new voice from progressives sayings we're not doing that. the near term thing is don't talk about debt, talk about growth. more government interventioner more stimulus in the market. so you still have this totally polarized conversation happening in washington. >> ron and ian, great to see you guys. christine, stay right where you are. need you for another conversation on infrastructure.
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that's understandable. if you get it, stay with me and maybe use my explanations for other who is don't get it. congress approves spending by creating bills and passing them into law, but instead of paying for them immediately, they give the treasury the power to borrow money to pay the bills. virtually used nowhere else in the world. last year the u.s. government spent $3.8 trillion. two-thirds of that roughly came from revenue. that's mostly taxes, $2.5 trillion. rest was a shortfall. we had to boar reit. $1. 3 trillion. that is the deficit. you take the sum total of those annual deficits and enter oast on them and that creates the national debt which right now is about 16.4 and change trillion dollars. now, the u.s. treasury is empowered to borrow money to make up the shortfall between revenue and expenses, the deficit. but only up to a certain limit. that's the debt ceiling. treasury does not make decisions about how the money is spent. they are simply empowered in this case to write the checks to
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pay the bills that are already incurred by your democratically elected congress. now that we've hit the debt limit, exceeded it a little bit, the treasury has two options. they can fiddle around with $200 billion the way you would if you're a little short on your monthly bills, paying some now, refinancing a little bit. that would get us through mid-february to early march. once that stops working the treasury needs to rely on the cash it has on hand and the revenue that comes in each day from taxes. problem is there isn't always that much cash on hand or enough money coming in on most days to cover the expenses. if there were, we wouldn't have a deficit. let me give you an example. one day as an example. february 15th. i choose that day because that might be the day, might be a little early but the day we stop being able to mess things around. federal government on that day will take in an estimated $9 billion in revenues. again, that is mostly taxes. on the same day, $52 billion will need to be paid out. a shortfall as you can see of
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$43 billion. so the treasury needs to prioritize payments on that day, february 15th. now, can pay some bills on time, put off others. we're not entirely sure prioritizing payments is legal, but that is probably what they'll have to do. alternatively the treasury could wait until it has enough revenue on hand to cover one full day's payments and make all the payments at once. all the bills would be paid late. we know how that stars to look. we can imagine that's not a great way to do business. johnny isakson is a republican senator from georgia, member of finance committee. thanks for being with us. you have an extensive business background, something i wish were mandatory, actually, in congress. and you can agree that deciding whether to pay some bills but not others while you wait to scrape up enough cash to make payments isn't a sustainable way of doing business. would you agree with that? >> no question about it, ali. it's all wrong. you're exactly right.
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>> give. the principles that you stand for and that many in the republican party agree with and, in fact, some in the democratic party that we have to deal with our spending, how do you square that with this very specific debt ceiling problem that we have, that we have financial only gaegss that we've already made that need to be paid and we have a second debate going on about how we should spend our money? >> well, basically, ali, we're now at 100% leverage as a country at about $16.5 trillion in debt and the same in gdp. if we continue to borrow and spend beyond our limit, we're going to compound that debt and deficit and be on an unsustainable course for this country to survive in the way you and i have known it. what i liken this to, we're at a robert frost poe em, two roads diverged and we need to take the one less travelled by and make all the difference, leave the talking points outside, sit down, prioritize our spending, act like a business person would have to act, like every american family has to act and send the
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signal to the rest of the world we're getting our house in order. we do that and we'll learn to greatness. if not, we're a debtor state. >> you identify two distinct issues we have to deal with. you said of the upcoming debt ceiling showdown, the president wants an automatic credit card and he's not going to get one from the congress. i like to point out, i understand why that analogy has been made and in the past i have made it myself, but i sort of decided that i don't like it anymore because the debt limit's different from a credit card in that with a with regard you charge items when you purchase them with the intent, the agreement to pay that. the debt limit is not actually a license to spend but to pay bills. a bit of an anachronism. only denmark has it elsewhere in the world. it forces a discussion on spending cut but it's not what the debt limit is for. >> your explanations have been right on target. let me tell you what i would wish the president would do. i hope the president's successful, because as a country
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if he's successful, we'll be successful. but he's got to begin to negotiate with the house and the senate to find a path forward on spending less and borrowing less or we're going to be on an unsustainable course. if it were me, if i were the president, i'd take the simpson/bowles proposal he got two years ago and never brought forward. i would push it forward and say deal with it in a macro sense. put tax expenditures, spending, on the table and put entit entitlements on the table. then you have the whole ball of wax from which the debt is caused and you have the solutions, reform of taxes, entitlements and -- >> you know that is at minimum a two to three-year process. i wish we would engage in it starting this minute. i show my viewers the tax code, 73,000 pages. takes work to get that done and a lot of lobby and interest groups. you're a centrist on this, a very reasonable guy.
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you want to get business done. you want to get a budget. can we not separate these things? i know there are a lot of people in your party who say if you take the debt ceiling off the table and agree to increase it, you lose your leverage, republicans do, to have the conversation that you'd like to have. how do we deal with that? right now politics is standing in the way of good economics. >> common sense needs to lead the way to a solution. we have two points we can leverage. one is the debt ceiling. the other is the cr that comes due on march 27th. the cr might be a the better place to use that leverage. but one place or another we need to decide that both sides need to come together at the table of common sense and begin to put america on a sustainable course of economics. >> what does a guy like you say then to the tougher parts of the republican party? not as many are in the senate as in the house. you talk about simpson bouls. i agree. most americans would find simpson/bowles a little tough. there are some difficult things in there most republicans and
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democrats wouldn't even put forward. the vice presidential candidate, paul ryan, was one of those guys on that committee and didn't vote for it. how do we get hard line republicans to say these are tough decisions, they're not going to be palatable, they're way further than most republicans would go in terms of debt spending cuts? >> ali, we have a tough problem. whatever solutions we come up with are going to be tough. but i would prefer tough solutions to a tough situation that perpetuates itself. we have to face the music. we're 100% leveraged. it's beginning to compound our debt. our deficits are growing. we won't be able to meet the dreams of the american people. we near a protected period of economic malaise. the only thing that will change that is a country that has confidence, business has confidence that taxes will be reasonable and predictable, regulation will be fair and equitable so they deploy the cash they have in the bank right now. a big problem and no easy solution. >> we'll keep pressuring
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washington to do the right thing. i hope they'll do the same within your caucus and say these are going to be tough decision, we can't bring the country to its knees because of our inability to compromise. thanks for being with me. >> thank you, ali. >> who is is this mysterious bag man and why might he be the only person passing a federal budget? ♪ ♪
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missed deadline sending a proposal to congress. the reason? the battle at the end of the year put the team behind schedule on the budget and it's been almost four years without a federal budget. looks like we may be headed for a fifth. there have been some political stuns to make it seem like budgets were going before congress and failing in the past few years. those budgets were put forward for an up-or-down vote without amendments. that's not really how budgets get passed. it never has been. it probably never will be. they're supposed to be disagreement and back and forth between the sides. we've just taken that all too far. we've become too uncompromising. both sides have essentially given up on trying to do it the right way. they could reach some middle ground agreeing on a budget, and if they did, it would look like this. by law the president is required to submit a budget proposal to congress before the first monday in february. we're not going to get there.
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once this proposal gets to congress, budget committees in the house and the senate work with public officials and other congressional committees to decide on a budget resolution. that is supposed to be done by april 15th. that's it. the budget resolution serves as a guide for all spending and revenue decisions for the year, at least that's how it's supposed to work, but none of this has happened since 2009. that means we're borrowing more and more to cover our tefr sit. in the last ten years alone we've raised the debt ceiling every year with the exception of one. america's concerns about the federal budget deficit and government dysfunction rose high enough in january to actually knock unemployment out of the top spot on gallup's list of most important problems for the first time since 2009. i want to bring in a man who's played a leading role in actually passing budgets through all parts of the budget process. he was the chairman of the house budget committee. jim nuss el guided six budgets through congress, served as the
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director of the office of budget and management. his nickname is knuckle, which is pretty cool. from 2001 to 2007 you were the house budget chief. today that job belongs to paul ryan. why were we able to get budgets done when you ran things and can't do it anymore? try not to give me a particularly political or partisan answer. >> it's all personal ability, of course, right? no. look. these are good people trapped in a very difficult if not terrible situation. with a process they're not even using anymore. you went through a very good outline of how the process is supposed to work. the challenge right now in my mind is that no one is using that process starring with as you said the president is going to be late with his budget submission, then congress will not even most likely consider the budget. you put your finger on it. the process isn't working. these are good people, smar
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people. not that they're anti-budgets. >> we've had disagreements between parties for all of history. why have we been able to get budge es in the past and now our ideological leanings stop us? >> right now people who are supposed to be sitting around a table in a committee room having hearings, discussing the budge its all having skin in the game, and by the end of the decision after amendments, after disagreements, after debate, they vote, then the process moves forward. right now as you know there's a couple of people that go into a back room. and after a few months the smoke clears, they come out with a deal, they give you five seconds to look at it, and then they cram it down your throat and say vote. that process is not working. >> it's flawed. >> terrible. >> a lot of people say we haven't got a budget and this one tried but got no votes. the truth is while we haven't got a new budget the way the
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system has worked, we're just working on an old budget. the disadvantage is we haven't updated it, haven't said this agency should get less money and this should get more. we're continuing on with old budgets. not like it's willy-nilly and anybody can spend anything they want right now. >> technically true. the reason why i think people get hung up on it first is for politics. but i think the second part is we're in a more unique situation today than we were four years ago. so to be operating under the plan that was put in place four years ago really doesn't make a lot of sense because there's so many things that have changed. >> what is the real consequence of not having a budget that is current? not asking you the consequences of not having a budget because that's misleading terminology. but of not having a budget that reflects 2013. what's the consequence? >> there are three things. one, it doesn't help control the congressional process, because it's kind of the fences that outline the entire process for the year is the budget, number one. two, it provides unbelievable amount of uncertainty to the
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rest of the government and how they determine spending. there's a lot of waste as a result of people just hurrying it up and use it or lose it mentalities. the third is what it does in the marketplace. whether it's the tax code or fiscal spending, can't make decisions, and that has a challenge, of course, to the marketplace that helps -- that is driven at least in part by fiscal spending. >> i don't really love comparisons to household, whether it's debt limits or credit card limbs. but in this case this is easy to understand. you're going to operate your household differently than you did four years ago because your income and expenses have changed. and we're still using the same fences we were using four years ago to use your expression. >> that's exactly right. and the situation right now becomes even more complicated because if new members of congress for now two different congresses have not exercised that muscle memory of understanding how the process
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works, they're not going to be able to be very effective when they actually need to exercise that process. >> it's an important process. >> it is. >> jim nussle, good to see you. thanks for being with us. i hope you come back because we'll be discussing this a lot in the next couple weeks. former director of the office of management and budget, former representative and head of the budget committee. if you could get a three to one return on your investments, would you take it? of course you would. what is holding the u.s. back from investing in our roads, bridges and ports? ♪ ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit.
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you've heard me say that investment in infrastructure is one of the best things we can do to boost the u.s. economy. over the short term, investment in infrastructure creates construction jobs. over the long term, though, better roads, railways and ports. they allow u.s. businesses to operate more efficiently and they attract business to the united states. there is no denying that america's infrastructure is in a sorry state. the american society of civil engineers gives it a grade of "d." the u.s. will invest in infrastructure but not enough. here's what the u.s. needs. $2.75 trillion in investment in infrastructure to bring it to a grade of good repair. but the american society of civil engineers xps the u.s. to invest $1.66 trillion, which
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means 40% of infrastructure needs will go unfilled. that means longer commutes, higher prices, more blackouts. what is that extra $1.9 trillion we are not going to spend buy you? of course to the asce it avoids $611 billion and costs the households $1.2 trillion in costs for businesses. u.s. economic output would be increased by $3.1 trillion. it will save 3.5 million jobs. every household will have an additional $3,100 in disposable income each year. christine romans is host of your "bottom line." kate asher is the milstein professor of urban development at columbia university, also a principal at apple consulting. welcome. thanks for being with us. the u.s. spends around 2.4% of its economic output on infrastructure compared to 5% in europe, % in china. you say the problem isn't money,
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it's somewhere else. i think a lot of the problem is political. it's all about the federal structure and the ability of the states to stop investment and the difficulty that local agencies and entities have putting their hands on money that in other countries they'd be able to spend. >> is the issue that -- it sounds so obvious to me as a business guy that various parties could put a certain amount of money in and we'd get this overall benefit. but there really is this just general sense that governments shouldn't spend money on these things, that the private sector will deal with it. whose responsibility is this to build this infrastructure? >> well, you know, in every country in the world it's the government's responsibility. but other countries are a little smarter and actually embrace the private sector and allow them to get on with it. but we found it hard to really embrace any kind of privatization. we kind of want the private sector go-to get on with it but we can't actually delegate government responsibility to them because our politicians won't let us. when we try to privatize turnpikes and build bridges
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privately there is actual revolts at state legislatures. we can't get out of our own way. >> christine, i want to play devil's advocate for a moment. does this report, which gives the u.s. a solid "d" across the board -- in fact, some of our best grades with a c-plus in waste management or something like that -- does it overstate how serious the issue is? >> it is a serious issue, but a "d" grade, for example, a few years an appropriations staffer told me, look, it's the american society of civil eng noors. they want a lot of this work. they count every last berm and bridge. >> they might be an interested party, spend $3 trillion on infrastructure. >> and the view at least in washington is, look, this is maybe rallying for union jobs. they don't want to be seen as wanting to go after too much infrastructure spending with government money. the other interesting thing to me about this, too, is other countries are starting from scratch. we have roads, bridges, cell tower, we have airports, all these things already.
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washington is less of an immediacy to them. in a way, they can almost gloss it over. >> the electrical grid is a perfect example. we have one. once in a while no lights, extended blackout and then we're all about why haven't we fixed the infrastructure. >> or a bridge that falls in minneapolis in 2007 and people say we have to look at our bridges. like the emergency about that goes away after a while. so that's one of the things here. when you talk to people in washington they say we don't need to spend all those trillions, just a little bit. we know we have a "d" but come on, we're not going the fix everything single thing. >> a brand-new country with low labor rates can probably get an "a" more affordably than the u.s. can. kate, i want you to listen to something fareed zakaria told me last week on this program. >> places like india, beyond everything else, they're a very poor country. you're just getting basic increases in standard of living. india's per capita gdp is
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$1,500. ours is about $50,000. when you're at our level, when your workers have the kind of wages our workers have, which we want them to have, you've got to get very smart. >> interesting conversation, kate, i was saying fareed travels all over the world. all sorts of countries are building infrastructure that have governments that are in the way, not particularly functional. why is it a bigger problem in the u.s.? his point is when you're paying people $50,000 you need everything to work, your bridge, broadband infrastructure, transport infrastructure, all your electrical infrastructure. is there a really good argument that this sort of additional targeted investment in infrastructure will do better for business in america? will it attract business and increase wages? >> i think it's sector driven and i think in some sectors like the electricity sector, the road and rail sector, the lack of investment really does hamper competitiveness of american companies. i think in other sectors that people talk about -- aviation,
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ports, water -- i think it's less of an issue because our infrastructure is not as poor as that report would make it out to be. >> christine, another point that fareed and others make is that while we're all very, very concerned about levels of deficit in this country, the fact is if you were to choose to borrow money, historically there may never have been a better time than right now because it costs the u.s. government about 1.8 of our money for ten years. >> as the world is worried about america and its ability to pay its debts, moneys flood into u.s. treasuries driving down interest rates making it cheaper for the government to borrow more money. many say it has never been a more attractive time financially for the government to double down here and find some important projeblgs that are going to make this more competitive and help grow jobs and grow the economy at a cost of only 1.8% interest. and remember we own most of our own debt. so you hear conservatives talking about we can't go to the chinese to borrow money to spruce up our own infrastructure.
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most of our debt is owned by us. we spent $850 billion in stimulus and did do things like railroad bridges and things that were on the books. >> tax cuts. >> most of that was tax cuts. we sort of started it and then stopped. you can't call it stimulus. that will never sell in washington. >> kate, thank for joining us. principle at apple consultant. christine romans, host of "your bottom line." remember this? what is that? morton gecko in "wall street" was ahead of thiz time with this clunky, heavy, brick phone. flash forward 25 years and it's been replaced by the smartphone. i'll tell you why apple may be losing its hold on the market.
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yeah, okay, mom, i'm doing a show. call you back. remember these things? >> i don't care where or how you get it. >> gordon gekko, he made these phones famous in "wall street." i happen to like the sequel, "wall street 2." >> this is a financial crisis and anyone who doesn't admit
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that is just kidding themselves. >> but let's talk about phones again. if you're like me, you are addicted to smartphones like the iphone. apple's stock is off its high. take a look at the stock from 2007 when the iphone was introduced up to there. this year it came off its $700 high. december the 6th it was trading at $545. people were wondering is something going wrong with this stock? i asked an apple analyst about it. here's what she said back then. >> the initial resistance is around $600. that's where apple has been selling pressure pretty recently. i think that's a conservative upside target for the intermediate term, about 10% above current levels. beyond that, if we see a breakout beyond that level, we could look at $700 again, which is where we peaked in september. >> let me explain that this to you if you're an investor. at $535 she was suggesting it
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was a safe buy until $600 and if it somehow gets that it might soar to $700. unfortunately it's gone the other way, down to about 480 bucks a share. i'm going to talk to you about that in a second. this 480 bucks or 500 bucks a screaming buy for apple or is there something wrong with the company? remember this? remember back in 2007, this guy made this thing huge. >> this is one device. [ cheers and applause ] and we are calling it iphone. >> okay. everybody knows who that is. steve jobs. do you know who these two guys are? i don't know how this guy got in the picture but these two this is jim and mike. if p you were canadian like me, you'd know. these are the guys who created the blackberry. this one. which a lot of people still use. the problem with these guys is when the makers of the blackberry first saw the iphone they looked at it and said, not
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really, probably a flash in the pan. look at what happened. take a look at blackberry versus iphone sales. blackberry sales are the ones in the red line. iphone sales in the other line. go back to 2007 when this all started, the iphone came out. these sales were going similarly. in 2010, the reason the iphone jumped the way it was is a lot of major companies who until then had only let their staff use blackberries bowed to the pressure to use the iphone and said let's get iphones in there. iphones took off. they've come down, as well, a little recently, but see what happened to blackberry? those sales just dropped off. but blackberry's maker, research in motion, could be ready for a comeback. why? well, the blackberry ten. it's coming out on january 31st. won't be available to everybody on january 1st but it's coming out on january 31st. and a lot of people say this is the thing. this is the phone. maybe they live to fight another day. some of you have been
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blackberries, some have blackberry stock. this stock has taken a beating. bottom line, that stock could go up based on some analysts, apple, a lot of faith in that company. still, they need to make sure they're not complacent about this new device blackberry will come out with. blackberry lives to fight another day. remember, android still enjoys more market share gains than either of these two. whether you're a phone owner or investor in these companies, this is an interesting space. coca-cola reaps billions off sales of sugary drinks worldwide. now it says customers should be more healthy and drink fewer of them. that a pr stunt or a cunning business move? i'll talk to the boss of coke next. 30 shrimp for $11.99. i can't imagine anything better. you're getting a ton of shrimp, and it tastes really good! [ male announcer ] hurry in to red lobster's 30 shrimp for just $11.99! choose any two of five savory shrimp selections, like mango jalapeño shrimp and parmesan crunch shrimp. two delicious shrimp selections on one plate! all with salad and unlimited cheddar bay biscuits. 30 shrimp, just $11.99 for a limited time.
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quit, this is the definition, coca-cola, the iconic coke bottle sold in 200 countries along with 3500 other coca-cola products and a good deal of them are full of sugar. across america, you see people drink coke and soft drinkses in big gulp style cups. soft drinks have come under fire from health advocates and politicians including fork's mayor michael bloomberg over growing obesity in the country. now coca-cola acknowledged a link between sugary drinks and weight problems. >> for over 125 years, we've been bringing people together. today we'd like people to come together on something that concerns all of us, obesity. the long-term health of our families and the country is at
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stake and as the nation's leading beverage company, we can play an important role. >> now, that's an ad that coca-cola starting running this past week. it's not often you hear a company suggest customers possibly dial back on how much of their product one consumes. coca-cola is the single largest beverage company empty world. joining me now to discuss this and more is ceo muhtar kent. good to see you. thank you very much for joining us. this new -- >> good to be here. >> this new adnounces new smaller sized drinks, number of calories on each drink marked clearly to help people manage the sugar they consume. coke's been around for a long time. 20 or 32 ounces of coke as one of my producers points out doesn't just find its way into someone's mouth. are you getting soft to the idea that people don't feed to take personal responsibility for what they consume and that governments and companies need to tell them? >> i think, ali, this is the time for coca-cola to
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actually -- it's not taking a hard turn. it's actually amplifying what it has been doing for many, many years. we've always been part of active healthy lifestyles. and we think this whole debate about obesity of a societal issue, it's complicated. it's a societal issue and we find that it is correct and right and the right time for us to raise awareness, use our resources to raise awareness about this societal issue, and that we need to ensure that people, consumers have the right information. that's why we're putting the information of calories on the front of the pack. that's why we're giving consumers more choice. that is why 25%, 25% of our entire global portfolio today is calorie-free or low calorie. and that is why 40 plus percent of trademarked coca-cola sold in
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the united states through innovation, through smaller packs, through portion controls, through innovative beverages is now calorie-free. >> you and your competitors, because i've seen the signs on trucks that deliver beverages to stores in new york saying, get basic get the politicians out of your business. you don't like the idea that bloomberg and others are saying, it's sugary drinks that make kids fat. >> i have a tremendous amount of respect for mayor bloomberg as i do for all the other mayors all other politicians in the united states. all across the world. i think they have the right interests of their people when they talking about this issue. but i do think that this is not about one product, this is not about one package. this is a broader coalition that needs to come together and work together to create better informed choices, to create more innovation and also to make people more motivated to make
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those right choices. >> let me ask you this though. next week not only will be at the world economic forum in davos switzerland. you are co-chairing. talk to viewers about why this gathering which looks like the top 1% of the top 1% is important to them. what is so important about what goes on in davos. >> because it does bring together that important golden triangle of business and government and civil society together. and together, that group has to reimagine growth, together that group has to create the right platforms to engage youth, together that group has to create the right platforms to empower, expand sustainability innovations around the world that will employ more people. together that group has to engage and empower more women, entrepreneurs around the world. we have to all come together and properly, effectively in a more dynamic manner, collaboratively
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manner reimagine growth because if we don't, there's a real danger that the social fabric is going to break down around the world with youth unemployment under 27, unemployment around the world at 40, 50% globally. >> muhtar, i wish you the best of luck there.always a pleasure to talk to you. muhtar kent one of the world's finest ceo, chairman and ceo of the coca-cola company. coming up next, i'll tell you why i'm going to davos. trust me, it's not because of the weather. we are talking cold. multi-car, paid in full -- a most fulsome bounty indeed, lord jamie. thou cometh and we thy saveth! what are you doing? we doth offer so many discounts, we have some to spare. oh, you have any of those homeowners discounts? here we go. thank you. he took my shield, my lady. these are troubling times in the kingdom. more discounts than we knoweth what to do with. now that's progressive.
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